Are you dreading graduation because it means you will have to begin repaying your student loan? Or, are you already having trouble making your monthly loan payments? More importantly, do you know the consequences of defaulting on your student loans?

You should, because default can have long-lasting, negative consequences on your financial future!

What is Default?

Default means failure to honor the repayment agreement of a loan. That includes failure to make payments on time, failure to make payments in the correct amount, or failure to file deferment requests properly or on time.

When a loan enters default, the lender transfers the loan to the guarantor. The guarantor then owns the loan from the lender.

It is our goal to help students keep their student loan(s) out of default and to assist in bringing and/or keeping their accounts current.

In Repayment Trouble?

There are several options available to those who find themselves in repayment trouble.

Deferment - you may postpone your payments when certain criteria are met such as unemployment, economic hardship, disability, and school enrollment.

Forbearance - permits the reduction of payments, provides an extension of time, or temporarily postpones payments. Financial problems that do not meet the requirements for a deferment might qualify you for the forbearance.

Consolidation - by consolidating your student loans, you might be able to reduce your monthly payments. Contact your lender or servicer for more information.

Alternative Payment Plan - ome borrowers qualify for other special payment plans such as Income Sensitive, Graduated, or Lowered Payment Plans. You may contact your lender or servicer for more information.

Options After Default

Federal regulations provide three options to help borrowers in default on student loans restore their benefits.The three options are:

Reinstated Eligibility - You may still be able to regain your eligibility to participate in federal student financial aid and programs even though your loan is in default. You must make six voluntary, on-time, consecutive monthly payments. Your loan will still be considered in default but you will have reinstated your eligibility to apply for federal student aid. The amount you will have to pay will be determined by the amount of your debt and your individual economic circumstance.

Rehabilitation - Loan Rehabilitation allows you to remove your loan from default. Under Loan Rehabilitation you make on-time, voluntary, consecutive monthly payments for a minimum of one year (12 consecutive months).

Consolidation - Loan Consolidation is available to all borrowers, including those in default. Loan Consolidation allows you to combine several loans into a single account with new repayment options. If your Consolidation application is approved, your loan will no longer be considered in default.

Consequence of Default

After your student loan has defaulted, the entire balance becomes due and you are no longer eligible for any Title IV financial aid or for any of the options described above.

Other consequences of default may include:

Reporting the default to all national credit bureaus.

Withholding of a percentage of your wages until the debt is paid in full.

Adding collection and attorneys' fees to the balance of your loan(s).

Seizure of your IRS tax refund by the guarantor or U.S. Department of Education.